Mind the Gap?

Have you heard about gap insurance? Curious about what it does? How it works?

The increase in health insurance premiums, year over year, has led to some pretty creative solutions. Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs) are both examples of strategies that seek to raise the deductible for a group plan and then have a plan for mitigating all or a portion of the risk taken on with the higher deductible. Unfortunately, HRAs and HSAs don’t shift all the risk onto someone else, they rely on the employer and/or employee taking on more risk as well. For some employers, that’s a great idea. For others, the amount of perceived risk may be more than they want to take on.

Enter Gap Insurance

Gap Insurance is designed to replace all or a portion of the deductible with fully-insured coverage for that corridor. Gap Insurance does not typically pay for the costs of prescription drugs or doctors visits, it’s there to cover the cost for care that’s typically delivered in a hospital.

Gap Insurance is not usually designed to be paired with a Qualified High Deductible Plan – it works best when paired with a traditional PPO.

Bottom Line – Gap Insurance can be a great tool. It can also be a little complicated and it’s important to make sure that everyone involved knows how it works. Also, Gap Insurance is a group health plan tool – it’s not available on an individual basis.

This blog is intended to be educational in nature. It is not advice and should not be interpreted as such. If you’re interested in discussing options for insurance coverage in PA or MD, we are happy to provide our expertise.